GAO Alarmed by RTC Legal Team Shake-up
The federal legal team that has been pursuing former savings and loan officials is being dismantled just as the government is facing critical deadlines in its effort to go after wrongdoers and recover money for taxpayers.
The action, taken by top officials at the Resolution Trust Corp. over the past few weeks, has thrown the legal staff into turmoil, jeopardizing potential civil lawsuits against officers, directors, attorneys and accountants of failed S&Ls;, according to the General Accounting Office, the congressional watchdog agency.
Fourteen managers of the RTC’s professional-liability division are being ousted and as many as half of the 70-member staff are being replaced, sources said.
RTC Deputy General Counsel Richard Aboussie--who gained control over the division in April--denied there was a “turf battle.” He said the departing lawyers would be replaced.
Regardless of the cause of the staff turnover, the GAO said it is alarmed at the impact of the RTC’s changes on the S&L; cases.
Over the past year the RTC has filed 176 professional-liability claims for fraud, negligence or other actions contributing to S&L; failures, the bulk of them in the past few months. It still has 465 more failed S&Ls; to investigate, and statutes of limitations are expiring.
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